Puerto Rico Announces Long-Awaited Renewable Energy Request for Proposals

Holland & Knight LLP

The Puerto Rico Electric Power Authority (PREPA), a public corporation and governmental instrumentality of the Commonwealth of Puerto Rico, on Feb. 22, 2021, issued a request for proposals (RFP) to developers for the construction of 1 gigawatt (GW) of renewable energy capacity and 500 megawatt (MW) of battery energy storage on the island for a supply period of up to 25 years.  

Interested parties should submit their notice of intent to respond to the RFP by March 23, 2021, any requests for clarifications on the terms of the RFP are due by April 19, 2021 and final bids through the PowerAdvocate platform are due on or prior to May 3, 2021. Proposals are expected to be selected in July 2021 and are expected to achieve regulatory approvals in October 2021.

PREPA has the duty of providing electric power in a reliable manner, contributing to the general welfare and sustainable future of Puerto Rico. PREPA provides electricity to approximately 1.5 million customers, making it one of the largest public utilities in the United States by customers served. With nearly 6,000 employees, PREPA generates approximately $3.5 billion in revenues annually.

Pursuant to the Integrated Resource Plan (IRP) and final resolution and order issued by the Puerto Rican Energy Bureau on Aug. 24, 2020, over the next five years PREPA must engage in the procurement of new energy resources and the retirement of many of its fossil-fueled generating units. This is the first of six RFP tranches that Puerto Rico is planning on launching prior to 2025 with the goal of procuring a total of 3.75 GW of renewables and 1.5 GW of energy storage, which supports PREPA's efforts to reach 40 percent of its electricity from renewable resources by 2025, 60 percent by 2040 and 100 percent by 2050.

The first RFP tranche targets 1,000 MW of renewable energy resources and 500 MW (2,000 MWh) of energy storage resources, including 150 MW of distributed energy storage virtual power plants (VPPs). The RFP is open to all forms of renewable energy, including solar photovoltaic, wind, energy storage, hydro, VPPs or any combination of said technologies. PREPA will accept proposals for all or a portion of the announced capacity. However, renewable energy resources offered on a stand-alone basis must have generating capacity of at least 20 MW.  Projects awarded contracts under the RFP will be expected to achieve commercial operations within 24 months of selection and preference will be given to projects that can reach commercial operations by an earlier date. Forms of solar power purchase and operating agreements (PPOAs) and energy storage services agreements were made available through the RFP.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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